Cuts are eminently manageable: Watt

The extra cut to the bureaucracy through a 4 per cent efficiency dividend next year is “significant but eminently manageable", the nation’s top mandarin,
Ian Watt
, has told staff.

The government moved yesterday to set up a high-level working group to advise on finding the savings.

The public service must bear $2.2 billion in efficiency dividend and capital savings over the next three years.

It is understood Dr Watt told the six-weekly staff forum of the Department of the Prime Minister and Cabinet the extra 2.5 per cent dividend next year might mean PM&C had to stop doing some tasks, or would have to do some differently, but it would manage.

But Health Department secretary
Jane Halton
said her business and planning divisions had already identified tasks that would cease or be streamlined, to the tune of 124 full-time equivalent positions.

“We will now need to go further in ceasing, streamlining and prioritising activity across the department to manage our workload within a reducing budget, including a review of the way we conduct some of our core activities," she said in an all-staff email.

Health has already been downsizing after a review by the Boston Consulting Group.

Both Treasurer
Wayne Swan
and Finance Minister
Penny Wong
are playing down the risk of forced redundancies.

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The working group will also advise on wider public sector reforms, including to the senior executive service.

A spokeswoman for Senator Wong said yesterday the group would be established shortly and would report to her.

It would be led by Special Minister of State
Gary Gray
and include representatives from the Community and Public Sector Union, the Australian Public Service Commission, PM&C and Finance.

The National Secretary of the CPSU, Nadine Flood, said the union was taking part not because it supported the cuts but because it wanted them to have the least impact on public servants and the community.

“We will also use this process to hold the government accountable for the impacts of this flawed decision," Ms Flood said. “I think it is time for a dialogue about public service funding that goes beyond these repeated easy hits."

One agency head said that since, as a rule of thumb, staff costs amounted to two-thirds of department costs, it would not be possible to make all the savings from non-staff costs.

“You might get half but you won’t get it all. You might bear down more heavily than you would on staffing costs, but at the end of the day you can’t say there will be no jobs [lost]."

The president of the Institute of Public Administration, Australia, Percy Allen, said it would be hard for small agencies.

“When large cuts are needed at short notice it’s often best to prioritise and suspend discrete programs than insist every program go on a crash diet that’s disruptive and unsustainable," he said. “Also, given the escalating global financial crisis, trying to offset a tax revenue downturn by draconian cuts to public services does not make sense."